Leading organisations regularly espouse the benefits of gender diverse leadership teams, but few take the time to measure outcomes. This lack of measurement is problematic when the business case for diversity is challenged, e.g. the consequences of management ranks comprising 25% women[1] and CEOs comprising 5.2% women (in S&P 500 companies)[2].

Aim

The aim of Sodexo’s study was to identify the impact of gender balanced management teams on performance outcomes, and thus to extend and expand on their own research as well as that of consulting firms and agencies. Elements that they considered included:

Women in leadership positions

The mix of men and women in management positions

Financial performance indicators

Non-financial performance indicators.

In particular, the study tested the performance implications of a gender-inclusive culture compared to a gender-dominated culture. i.e. where there is either more men than women or women than men.

Method

The study used a gender ratio of 40-60% to define gender-balanced management (optimal outcomes evidenced via previous research3) teams – and compared gender-balanced and gender imbalanced teams. Sodexo collected and analysed data from over 50,000 managers from 70 entities worldwide. Management teams were drawn from a diverse range of functions, and ranged from top leadership to site management.

Key findings

Sodexo found that entities with a gender-balanced management scored higher across five key performance indicators:

Employee engagement: Defined as the number of entities with an employee engagement rate higher than the external benchmark in FY16. 14 percentage points higher for entities with gender-balanced management. (In Sodexo’s 2016 paper they note that studies have found that a 5% increase in employee engagement is linked to a 3% increase in revenue growth in the subsequent year.3)

Safety: Defined as the number of entities that decreased workplace accident rates between FY14 and FY16. 12 percentage points higher for entities with gender-balanced management

Employee retention: Defined as the average employee retention rate in FY16. 8 percentage points higher for entities with gender-balanced management

Client retention: Defined as the number of entities registering a client retention rate of 90% or more in FY16. 9 percentage points higher for entities with gender-balanced management

Operating margins: Defined as the number of entities significantly increasing operating margins between FY14 and FY16. 8 percentage points higher for entities with gender-balanced management.

Outcomes

The study concluded that ‘teams managed by a balanced mix of men and women were more successful across a wide range of outcomes’. In teams that had a gender-balanced management (compared to teams where there was no gender balance) key performance indicators were all higher. These included:

Operating margins,

Client and employee retention,

Employee engagement, and

Safety.

The pattern of results indicated that in order to achieve critical gains in financial and non-financial KPIs an organisation needs a ‘near-equal balance’ of men and women in management. The research also found that benefits plateaued once the proportion of women in management exceeded 60%.

While this study is a ‘multi-year longitudinal analysis of gender parity within all levels of leadership globally at Sodexo’, the outcomes and findings have obvious implications for all organisations, particularly given Sodexo’s diverse business holdings. In addition to supporting the business case for gender diversity in management, this important study gives guidance on the nature of measurement indicators which could be used by other organizations.

⃰Sodexo is an International Organisation Headquartered in Paris, France. They offer Quality of Life Services to organisations globally. Sodexo provide services such as contract catering, hospitality to concierge, security to bio-cleaning or asset maintenance, or innovating with new services across a wide range of industries

Catherine (Cat) is a Manager in our Risk Transformation Practice. She has 15 years of Human Capital experience across Financial Services and Manufacturing in some of Australia and New Zealand's largest firms. She has worked across a broad range of Human Capital disciplines and change programmes.

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